Part XIC of the Trade Practices Act 1974 enables the ACCC to ‘declare’ telecommunications services. Upon declaration, standard access obligations apply. The access provider is obliged to supply the service to an access seeker upon request.
The ACCC has the ability to vary or revoke declarations but, with the exception of minor changes, must hold a public inquiry ahead of such changes.
The Trade Practices Act enables carriers to apply for exemptions from the standard access obligations that apply to a declared service. The ACCC can only grant exemptions where they promote the long term interests of end-users (LTIE).
Division 5 of Part XIC of the Trade Practices Act enables access providers to voluntarily lodge written access undertakings with the ACCC specifying the terms and conditions upon which they agree to supply a specified service. The ACCC can accept or reject the undertaking.
ACCC decides to reject Telstra’s unreasonable ULLS undertaking
On 28 April 2009 the ACCC issued a final decision to reject Telstra’s undertaking application for a $30 monthly charge for the unconditional local loop service in metropolitan areas. The ULLS is an essential input used by access seekers in combination with their own equipment to provide competitive telephony and high-speed broadband services to customers and businesses. The charge relates to the rental price Telstra charges competitors for access to the copper wire from the telephone exchange to a house or office.
Following an extensive assessment of Telstra’s undertaking, including Telstra’s own cost model, the ACCC is not satisfied the $30 charge for metropolitan areas is reasonable. The ACCC believes that Telstra’s proposed price is unlikely to promote competition in the broadband and telephony markets. It may also discourage investment in telecommunications infrastructure. In rejecting the undertaking, the ACCC also notes that Telstra’s proposed monthly charge was significantly above estimates derived from benchmarking against comparable countries.
ACCC finalises access arrangements for digital radio
On 23 April 2009 the ACCC finalised the access undertakings that set out terms and conditions to apply to digital radio broadcasters and digital radio multiplex transmission service providers. The decision concludes 18 months of extensive consultation by the ACCC with industry and other interested stakeholders.
Digital radio services are to commence in Adelaide, Brisbane, Melbourne, Perth and Sydney by no later than 1 July 2009.
The ACCC is able to arbitrate telecommunications access disputes and make a final binding determination to resolve a dispute. Arbitration hearings are private and the ACCC generally does not make any public comment on disputes except to announce when a dispute has been notified.
New access disputes
In April 2009 two new access disputes were notified to the ACCC, both about Telstra’s supply of ULLS. They are between:
NEC Australia (A/S) and Telstra Corporation Ltd (A/P)
Network Technology Pty Ltd (A/S) and Telstra Corporation Ltd (A/P).
Final decisions and distribution determination—New South Wales distribution businesses
On 30 April 2009 the AER released its final decision on the Country Energy, EnergyAustralia and Integral Energy (New South Wales distribution network service providers) distribution determinations for the period from 1 July 2009 to 30 June 2014. The final determinations approve nominal revenue requirements for the New South Wales DNSPs that increase from:
$938 million in 2009–10 to $1322 million in 2013–14 for Country Energy
$1231 million in 2009–10 to $1887 million in 2013–14 for EnergyAustralia’s distribution assets
$133 million in 2009–10 to $245 million in 2013–14 for EnergyAustralia’s transmission assets
$810 million in 2009–10 to $986 million in 2013–14 for Integral Energy.
These revenues are based on a weighted average cost of capital (WACC) of 8.78 per cent for Country Energy and EnergyAustralia and 8.83 per cent for Integral Energy.
The final determinations provide for capital investment over the next five years of ($2008–09):
$3826 million for Country Energy
$7838 million for EnergyAustralia
$2721 million for Integral Energy.
The final determinations also provide for total operating expenditure allowances of ($2008–09):
$2052 million for Country Energy
$2628 million for EnergyAustralia
$1516 million for Integral Energy.
Documents associated with the final distribution determinations, including the final decision, consultants’ reports and the New South Wales DNSPs’ regulatory proposals, are also available on the AER website.
Final decision and transmission determination—TransGrid
On 30 April 2009 the AER released its final decision on the TransGrid transmission determination for the regulatory control period from 1 July 2009 to 30 June 2014. The final decision approves nominal maximum allowed revenues for TransGrid that increase from $633 million in 2009–10 to $820 million in 2013–14.
The revenue allowance is based on an opening asset base of $4118 million and a WACC of 8.79 per cent.
The final determination provides for $2.4 billion ($2007–08) of investment in TransGrid’s electricity transmission network over the next five years. It also provides an allowance for contingent projects of $1.8 billion ($2007–08) during the next regulatory control period. A total operating expenditure allowance of $758 million ($2007–08) is also provided for the next regulatory control period. The final transmission determination also provides for a service target performance incentive scheme to apply to TransGrid, as well as approving TransGrid’s negotiating framework and the negotiated transmission service criteria to apply to TransGrid for the next regulatory control period.
Documents associated with the TransGrid transmission determination, including the final decision, consultants’ reports and TransGrid’s revenue proposal, are available on the AER website.
Final decision and distribution determination—ActewAGL
On 30 April 2009 the AER released its final decision and distribution determination for ActewAGL relating to the regulatory control period from 1 July 2009 to 30 June 2014.
The final decision approves nominal annual revenue requirements for ActewAGL that increase from $140 million in 2009–10 to $178 million in 2013–14. The revenue allowance is based on an opening asset value of around $599 million and a WACC of 8.79 per cent.
The final determination provides for capital investment of $275 million ($2008–09) in ActewAGL’s electricity distribution network over the next five years, an increase of more than 70 per cent from the level of investment undertaken over the past five years. The AER has also determined a total operating expenditure allowance of $341 million ($2008–09) for the next regulatory control period.
Documents associated with the final distribution determination, including the final decision, consultants’ reports and ActewAGL’s regulatory proposal, are available on the AER website.
Final decision and transmission determination—Transend
On 30 April 2009 the AER released its final decision on the Transend transmission determination for the regulatory control period from 1 July 2009 to 30 June 2014. The final decision approves nominal maximum allowed revenues for Transend that increase from $164.7 million in 2009–10 to $222.4 million in 2013–14.
The revenue allowance is based on an opening asset base of $994 million and a WACC of 8.80 per cent.
The final determination provides for $607 million ($2008–09) of investment in Transend’s electricity transmission network over the next five years. It also provides an allowance for contingent projects of $412 million ($2008–09) during the next regulatory control period. A total operating expenditure allowance of $254 million ($2008–09) is also provided during the next regulatory control period. The final transmission determination also provides for a service target performance incentive scheme to apply to Transend, as well as approving Transend’s negotiating framework and the associated negotiated transmission service criteria.
Documents associated with the Transend transmission determination, including the final decision, consultants’ reports and Transend’s revenue proposal, are available on the AER website.
Final decision—review of the weighted average cost of capital parameters
On 1 May 2009 the AER released its statement (for electricity transmission) and statement of regulatory intent (for electricity distribution) on the revised WACC parameters for these network service providers. The statements and accompanying final decision are available on the AER website.
The National Electricity Rules (NER) provide that the AER may review the WACC parameters to be adopted in determinations by electricity distribution and transmission network service providers. Reviews are to be conducted every five years; the first review was concluded on 1 May 2009. The outcomes of this review will apply only to electricity transmission and distribution determinations where the proposal is submitted after 1 May 2009 and before the completion of the AER's second review, in 2014.
Service standards compliance review 2008
In April 2009 the AER released the outcome of its service standards compliance review for the 2008 calendar year. AER staff reviewed the transmission service standards results for eight transmission network service providers and determined the financial incentive to be applied for the 2009–10 financial year. The AER’s expert consultants, Parsons Brinckerhoff Australia, assisted in the review of several TNSPs.
Documents associated with the AER service standards compliance review 2008, including the consultants’ reports and TNSP submissions, are available on the AER website.
Victorians demand management incentive scheme for distribution network service providers
On 23 April 2009 the AER published its final demand management incentive scheme to apply to CitiPower, Powercor, Jemena, SP AusNet and United Energy (the Victorian DNSPs) for the 2011–15 regulatory control period. This follows the release of a proposed or draft DMIS on 19 December 2008. The AER received 10 submissions on the proposed DMIS. After considering these submissions, the AER has made its final decision on a DMIS to apply to the Victorian DNSPs.
The AER is now preparing for the forthcoming Victorian electricity distribution determination for the 2011–15 regulatory control period. As part of this process the AER is required to set out its likely approach to certain matters, including the application of a DMIS, in a framework and approach paper. This framework and approach paper will be published by the AER by 31 May 2009.
Documents associated with the DMIS, including the final decision, final DMIS, proposed DMIS and submissions, are available on the AER website.
On 15 April 2009 the AER released a draft decision on the access arrangement variation proposal submitted by APA GasNet Australia Pty Ltd on 18 December 2009 to its access arrangement covering the principal transmission system in Victoria.
The variation proposal concerns the application of tariffs to the western underground gas storage facility and SEA Gas connection points.
As set out in the draft decision, the AER proposes not to accept GasNet’s proposal.
The AER is now seeking submissions from interested parties by 4 June 2009 on the matters identified in this draft decision, and these will be considered in the AER's final decision.
The National Gas Rules provide GasNet with the opportunity to submit a revised proposal to the AER by 6 May 2009. Interested parties have also been invited to comment on the revised proposal if submitted.
A final decision on the variation proposal is scheduled to be released by the AER in early July 2009.
Copies of the variation proposal and the AER draft decision are available on the AER website.
Guideline—draft rebidding and technical parameters
On 7 April the AER released its draft rebidding and technical parameters guideline. The draft guideline covers several related areas associated with the bidding and rebidding of technical parameters, following the commencement of the NER's new provisions on 31 March 2009.
The new rules restrict the circumstances in which generators can declare themselves 'inflexible'—a special type of bid that means that a generator is not able to vary its output up or down. In addition, the new rules introduce a minimum speed that generators must be able to vary their output up and down.
The draft guideline replaces the existing Rebidding: guidelines on the disclosure of information, published by the National Electricity Code Administrator in July 2001, and outlines the detail that must be contained in a rebid reason submitted to the National Electricity Market Management Company.
The guideline also fulfils a requirement in the rules to publish a guideline on the additional information that may be sought by the AER to verify and substantiate the brief, verifiable and specific reason that must be provided with bids and rebids.
The closing date for submissions is Friday, 15 May 2009.
Sixth medical indemnity insurance monitoring report
The ACCC released its sixth medical indemnity insurance monitoring report on 28 April 2009.
The report has been prepared in response to a request from government to assess whether premiums levied by the medical indemnity insurers are actuarially and commercially justified. The report also considers the actuarial and commercial justification of premiums between jurisdictions.
The ACCC found that the premiums written for the 2008–09 financial year (2008 for two insurers) were actuarially and commercially justified. The ACCC also found that all insurers met the transitional provisions of meeting the minimal capital requirements by 30 June 2008 and are currently operating in a strongly capitalised position.
On 23 April 2009 the Australian Rail Track Corporation lodged an access undertaking application relating to the Hunter Valley Rail network with the ACCC for assessment under Part IIIA of the Trade Practices Act. The network will mainly provide rail infrastructure for the transportation of coal from mines to terminals at the Port of Newcastle. The undertaking sets out the terms and conditions on which ARTC will provide access to the network. The network excludes the interstate rail network also managed by ARTC, which is the subject of a separate undertaking currently in operation.
The ACCC will be releasing an issues paper inviting public submissions on the undertaking shortly. If the ACCC accepts the undertaking, the services covered by the undertaking cannot be declared under Part IIIA of the Act and the undertaking forms the basis for third parties to negotiate access to the services.
Draft water infrastructure charge rules and draft advice
On 6 April 2009 the ACCC released its draft water infrastructure charge rules and draft advice to the Minister for Climate Change and Water, for public consultation.
Under the federal Water Act 2007 the ACCC is required to provide advice on water charge rules for infrastructure operators to the mnister. The rules will apply to infrastructure operators within the Murray–Darling Basin.
The ACCC held a public forum on 30 April in Sydney to discuss its draft water infrastructure charge rules and draft advice.
Submissions on the draft water infrastructure charge rules and draft advice closed on 8 May 2009.
